The last few years have presented businesses with a number of challenges, from the disruption of the pandemic to the looming threat of recession. Nowhere has this been felt as keenly as in the manufacturing sector. Rising energy prices, steadily climbing interest rates, and supply chain disruption have taken their toll. That’s why financial leaders in the industry are now focused on resiliency.
For many, that means creating more digitally mature accounts receivable operations.
Digital maturity - an organization’s ability to quickly respond to the developments and shifting trends of technology.
In their 2023 Manufacturing Outlook, Deloitte stated, “Companies with higher digital maturity have shown greater resilience...during the pandemic. Continued investments in advanced manufacturing technologies can help develop the required agility.”
Putting data to work for you
“Investments in the right technologies can help manufacturers pivot quickly. For example, enhanced data and analytics capabilities can improve forecasting.” - Deloitte
As challenges in the industry have increased, so has an awareness of the importance of data. Unfortunately, for organizations still relying on manual accounts receivable, organizing and contextualizing data is a cumbersome process. AR representatives often must navigate multiple systems to find the information they need.
Even after they’ve gathered the relevant numbers, it takes time and effort to build them into a report that will provide actionable insights. Often, AR teams are forced to outsource the responsibility of creating custom reports. This is an expensive and impractical solution with the economy teetering on the brink of recession.
Digitization in the form of an automation solution centralizes all your data, making it easy to access all the information your team needs. Just as important, the right AR solution enables you to create customizable reports that can be tailored to the unique KPIs that matter most to your business. All of which can be accomplished without specialized IT knowledge.
An automation solution that uses artificial intelligence and predictive analytics also takes the guesswork out of business-critical activities - like cash forecasting. As manufacturing companies continue to plan for a potential recession, having a clear insight into cash flow is essential. Using algorithms, the AR automation software analyzes customer payment behavior and can estimate when a customer is likely to pay an invoice, with up to 94% accuracy. The software also analyzes your entire receivables portfolio, providing a comprehensive picture of how much money you can expect at any given time. With that information, organizations are better able to plan initiatives for the future.
Just as important, this data gives you the information you need to head off problems before they begin. With most manufacturing jobs having high upfront costs, late payments can put you behind the eight ball. By anticipating potential problems, members of the AR team can prioritize higher-risk accounts and work more closely with them to ensure invoices are resolved on time. A complete view of your outstanding AR also allows you to prioritize a hands-on approach for higher dollar invoices that are most likely to impact your cash flow.
Confronting staffing challenges
Resilience in manufacturing also requires organizations to take steps to meet the continued staffing challenges the industry is facing.
“Despite a record level of new hires, job openings in the industry are still hovering near all-time highs at 800,000. Additionally, voluntary separations continue to outnumber layoffs and discharges, indicating substantial workforce churn.” - Deloitte
How manufacturing companies respond to this challenge will play a significant role in determining whether they thrive, or simply survive. Digitization is helping organizations confront this issue on multiple fronts. Automation of accounts receivable processes eliminates a number of time-consuming tasks such as data entry and customer communications. This allows companies to operate with a lower headcount, easing the strain on AR teams.
Another key to both retaining and attracting new talent is the ability of team members to upskill and reskill. However, like the ability to take a strategic approach to collections, learning new skills on the job is contingent on time. When employees are burdened with time-consuming manual tasks, they are left little opportunity to develop new skills that would simultaneously allow them to increase contributions to team goals and engage in more fulfilling work.
Finally, experts have noted that the ability to offer flexible work arrangements will be key to retaining and attracting top talent. The success of remote and hybrid schedules has changed expectations on the part of employees. Digitization facilitates this by allowing members of your AR team remote access to the systems they need to perform their job. With unlimited users allowed, automation software allows them to log in from anywhere and at any time.
“Using a single system to track work, save notes and set tasks for myself and my team is a game changer. We can't remember what it was like working without it.” - Ryan Madden, Quadient AR User
AR Solutions with Built-in Resilience
By eliminating manual accounts receivable and adopting an automation solution, you provide your finance team with the resilience to navigate the major challenges facing the manufacturing sector. As interest rates continue to soar, supply chains continue to struggle, and the economy remains uncertain, AR automation provides the tools you need to confront challenges with confidence.
To take the next step toward business resiliency, download our white paper, From ‘Starting Out’ to ‘Superstar’: Mapping Your AR Automation Journey.
